Congressional Stock Trading, the Quiet Gutting of the STOCK Act, and What It Costs the Rest of Us

R Tamara de Silva

There is a rule in American financial markets. It is simple, it is strictly enforced, and it has sent people to federal prison. The rule is this: you do not trade on information the public does not have.

A fund manager who does it loses her license, her profits, and often her freedom. A corporate executive who does it faces criminal prosecution. A government employee at the FDA who buys pharmaceutical stock after reading an unpublished drug approval decision faces the full weight of federal securities law. The rule applies broadly, without sympathy, and with serious consequences.

Unless you are a member of Congress. In that case, the rule applies differently. Last week, the Speaker of the House told us why he thinks that is reasonable. His answer deserves a closer look, because it connects to something much larger: a war most Americans do not fully understand, a grocery bill that keeps rising, and an interest rate that will not come down. These things are related. The connection runs through the same rooms where the stock tips originate.

What Johnson Said, and What It Actually Means
House Speaker Mike Johnson, speaking to reporters on Wednesday, offered what he described as a sympathetic case for allowing congressional stock trading to continue. Congressional salaries have been frozen at $174,000 since 2009. Adjusted for inflation, members earn roughly 31% less in real terms than they did then. “At least let them, like, engage in some stock trading,” Johnson said, “so that they can continue to, you know, take care of their family.”

Set aside for a moment that $174,000 per year places a member of Congress in approximately the top 5% of American earners, well above the median household income of roughly $74,000, while the average American worker has seen their real wages eroded by precisely the same inflation Johnson cites as the congressional hardship. Set aside also that Congress members receive federal health insurance, a pension, a staff, and office expenses paid by taxpayers.

Focus instead on what the argument actually concedes. Johnson is not saying members of Congress should be permitted to invest in index funds or mutual funds, the diversified vehicles that create no information asymmetry and are available to everyone. He is saying they should be permitted to trade individual stocks, precisely the instrument through which non-public legislative and intelligence information can be converted into personal profit.

“At least let them engage in some stock trading so they can take care of their family.” The average American family cannot afford a $1,000 emergency.

The argument, stated plainly, is this: because Congress is underpaid relative to what its members could earn in the private sector, they should be permitted to supplement their income using information that would send a private fund manager to federal prison. This is not a policy position. It is a confession.

The Legal Framework That Governs Everyone Else
Insider Trading for the Rest of Us

Under Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5, it is unlawful for any person to trade securities on the basis of material, non-public information in breach of a duty of trust or confidence. The Supreme Court has affirmed and expanded this framework across decades of jurisprudence. The SEC enforces it aggressively.

A corporate executive who trades her company’s stock ahead of an earnings announcement she has seen faces criminal prosecution. A financial analyst who receives a tip from an investment banker and trades on it faces prosecution. A government employee at the FDA who buys pharmaceutical stock after reviewing an unpublished drug approval faces prosecution. The standard is applied broadly and without sympathy.

The rationale is sound. Markets function on the premise of equal access to information. When some participants trade on information unavailable to others, they do not generate wealth. They extract it from the counterparties who trade with them in ignorance. This is not victimless. The person on the other side of that trade is often a retail investor: a teacher with a retirement account, a small business owner with savings in an index fund, a nurse whose pension holds the securities being traded against her.

The STOCK Act and Its Quiet Dismemberment

In 2012, following a wave of public outrage sparked by a 60 Minutes segment documenting congressional trading during the 2008 financial crisis, Congress passed the Stop Trading on Congressional Knowledge Act, known as the STOCK Act. The law explicitly stated that members of Congress and their staff are not exempt from insider trading laws and required public disclosure of trades within 30 to 45 days.

The public celebrated. The markets applauded. Congress smiled for the cameras.

Then, in 2013, with virtually no public debate, Congress passed an amendment that eliminated the online public disclosure requirement for most congressional staff, the very provision that made the STOCK Act practically enforceable. The searchable database that would have allowed journalists, researchers, and ordinary citizens to track congressional trades in real time was quietly removed. Disclosure requirements remained on paper. Enforcement became effectively impossible.

This is how institutional corruption operates. Not with a dramatic vote to legalize wrongdoing, but with a quiet technical amendment that guts enforcement while leaving the appearance of regulation intact.

The Tariff Trades: What the Data Suggests
Johnson’s comments did not emerge in a vacuum. They came amid renewed scrutiny following one of the more striking market anomalies in recent memory.

On April 9, 2026, minutes before President Trump announced a pause on sweeping tariffs for non-retaliating countries, trading data showed an extraordinary spike in call option volume on the NASDAQ. Call options are instruments that profit when markets rise. The timing was precise. The volume was extraordinary. The beneficiaries, by definition, knew something.

Capitol Trades, the nonpartisan service that tracks congressional trading disclosures, began publishing what the May 15 disclosure deadline revealed. Among the early findings: a freshman Republican member of Congress who had introduced legislation to ban congressional stock trading had himself executed over 490 trades generating more than $5.6 million in profit since his election last November.

This is not an allegation of wrongdoing against any specific individual. The trades may have been perfectly legal. That is precisely the problem. The legal framework is inadequate to the informational advantage that congressional service confers.

When call option volume spikes on the NASDAQ minutes before a market-moving presidential announcement, one of two things is true: either the timing is an extraordinary coincidence, or someone knew.

The World That Ordinary Americans Are Actually Living In

Speaker Johnson expressed sympathy for congressional members struggling on $174,000 a year. It is worth describing the world in which most Americans are actually living, a world shaped in significant part by decisions made in the rooms where those congressional briefings take place.

The Strait of Hormuz and Your Grocery Bill

Since February 28, 2026, Iran has blocked the Strait of Hormuz, the narrow waterway through which approximately 25% of the world’s seaborne oil supply travels. The immediate market impact was visible: crude oil above $100 per barrel. The downstream consequences for ordinary Americans are only beginning to materialize, and they are not being adequately explained in mainstream coverage.

The transmission mechanism from a closed strait to a higher grocery bill is not complicated, but it operates on a lag that allows politicians and commentators to obscure the connection.

•       Oil above $100 raises transportation costs across every supply chain, including the truck that delivers produce to your grocery store, the ship that carries imported goods, and the tractor that harvests grain.

•       Natural gas, also disrupted by the conflict, is the primary input for nitrogen fertilizer. Higher natural gas prices mean higher fertilizer costs, which flow through to food production costs within one growing season.

•       Food inflation follows with a lag of six to twelve weeks. It is not yet fully visible in the Consumer Price Index, but it is coming.

•       The Federal Reserve, already watching inflation carefully, cannot cut interest rates without risking acceleration of an already-elevated price environment. Mortgage rates stay high. Credit card rates stay high. Auto loan rates stay high.

•       Consumer spending contracts as real purchasing power declines. This contraction hits lower-income households first and hardest, because they spend a higher proportion of their income on food, energy, and transportation.

The American worker earning $55,000 a year, which is approximately the median individual income, does not have a congressional salary, a federal pension, or access to material non-public information about when the tariff pause will be announced. She has a grocery bill, a gas tank, and a mortgage. She is the counterparty to the informed trade.

Why This Crisis Has No Quick Resolution

Financial markets have been pricing the Hormuz closure as a temporary disruption awaiting a negotiated resolution. The actual structural picture is considerably more complex, and considerably more relevant to anyone watching their expenses rise.

The political constraints on every major actor in this conflict point in the same direction: prolonged disruption. The leader of one of America’s closest regional allies faces active criminal proceedings that are suspended only during wartime, creating a personal incentive for continued conflict that no American diplomatic pressure can easily override. Iran’s post-crisis internal politics have shifted toward demands, including reparations, that no American president could politically deliver regardless of party. America’s Gulf state partners, who host American military forces, are acutely aware that their civilian populations depend almost entirely on desalination infrastructure that remains within range of Iranian military capability.

None of these are negotiating positions that resolve in five to ten days. They are structural realities. Every week they persist, the economic consequences deepen for the Americans least able to absorb them.

China’s Quiet Strategic Interest

One dimension of this crisis that receives almost no attention in American financial media is how much China benefits from its prolongation. A sustained oil shock that weakens the dollar, exhausts American military resources, damages the American economy, and accelerates global skepticism about the cost of American security guarantees is not a neutral outcome from Beijing’s perspective. China continues to purchase Iranian oil through a shadow fleet of tankers, providing Iran with the economic cushion that allows the crisis to continue.

The ordinary American paying more for groceries and gas is not just absorbing the direct cost of an energy disruption. She is absorbing the cost of a geopolitical contest whose full dimensions are not being explained to her.

The Connection That Should Trouble Everyone

The members of Congress who trade individual stocks on information derived from intelligence briefings and closed-door committee sessions are the same members of Congress who receive classified briefings on the Hormuz crisis, on the tariff negotiations, on the Federal Reserve’s deliberations, and on every other policy development that moves markets and affects the cost of living for ordinary Americans.

The information asymmetry is not incidental to their position. It is the position. The Speaker of the House has now told us, with genuine candor, that he believes this asymmetry should be preserved, because the alternative in his view is that Congress attracts less qualified people.

It is worth considering what qualifications are actually being valued here. The ability to legislate? To represent constituents? To make sound policy under pressure? Or the ability to translate privileged access to information into personal wealth, which is the very skill that, in any other context, American law defines as fraud?

The person on the other side of the informed congressional trade is often a retail investor: a teacher with a retirement account, a nurse whose pension holds the securities being traded against her.

What a Real Fix Would Look Like

The reform needed is not complicated. It does not require dismantling the institution or preventing qualified people from serving. It requires applying the same standard to members of Congress that already applies to every other person in America who handles material non-public information.

 

1.     Ban the trading of individual securities by members of Congress and their immediate families for the duration of their service. Index funds and mutual funds create no information asymmetry and are available to everyone.

2.    Restore and strengthen the online disclosure requirements gutted by the 2013 STOCK Act amendment: real-time, searchable, public disclosure of all trades.

3.    Apply the existing insider trading statute to congressional trading without the carve-outs that current practice permits, with meaningful enforcement.

4.    Require recusal from committee work involving sectors in which a member holds individual positions.

 

None of these proposals would prevent a qualified person from serving in Congress. They would prevent a serving member from profiting from the informational privilege that congressional service confers at the expense of the constituents they were elected to represent.

A Final Observation

Speaker Johnson noted that Congress has not received a salary increase since 2009. He is correct. Adjusted for inflation, that represents a meaningful decline in real purchasing power.

He might have added that the median American worker has experienced the same inflation with no compensating privilege. No access to closed-door briefings, no ability to trade ahead of market-moving announcements, no federal pension, no employer-paid health insurance. The average American family cannot absorb a $1,000 emergency expense.

Both of these things cannot be equally sympathetic.

The Substance Behind the Headlines is sometimes uncomfortable. But it is always the same: the rules that govern the many do not always govern the few. And when the few are the ones who write the rules, the distance between the two tends, over time, to grow.

 

R Tamara De Silva is a financial regulatory attorney, former futures floor trader, and CFTC registrant based in Chicago. She has filed regulatory petitions with the SEC and published extensively on Law360 on derivatives, event contracts, and market structure.